The wave of change is coming whether we like it or not. No, I am not talking about Neil Agius’s epic feat of swimming from Sicily to Malta in the name of environmental conservation, but in that we are moving incrementally closer to a cashless society. 

A silver lining as a consequence of the COVID-19 pandemic has been the widespread use of electronic systems across an array of industries. The speed and efficiency with which technology can make our lives better was at the forefront our conscience, whether it was the prevalent use of video-conference solutions or ordering pre-paid groceries online.

The payment industry has been in full swing, even pre-COVID, as the enthusiasm brought about by crypto-currencies as a form of digital payment has pushed countries like Sweden to make the bold attempt to begin a trial of the e-krona digital currency. Now the country is on track to become the first cashless country by 2023.

The has been a process which has been underway for the past ten years, with cash steadily losing ground as a payment method, a trend which was accelerated by the COVID-19 crisis. Swedish businesses are already not obligated to accept cash, with 2023 the target for cash to be completely removed from circulation according to Cecilia Skingsley, the deputy governor of the Sveriges Riksbank, Sweden’s central bank.

Indeed, in a survey conducted in 2018 by the central bank, four out of 10 Swedes had not used cash in the previous month, highlighting a declining trend which commenced in 2007. According to the nationwide survey, only 18 per cent of Swedes reported using cash recently compared with 40 per cent of Swedes in 2010.

The way the Nordics are quickly embracing a cashless lifestyle strongly contrasts with the countries in the south of Europe, the US and Japan, where cash is still a strong form of payment and with several places accepting only cash. I suspect that part of the reason is the costs attributed to having electronic payment solutions at points of sale, however these are set to reduce as more competition and market disruptors enter the marketplace, and cash-related banking charges increase in the industries bid to become leaner, more efficient institutions.

The advantages of cashless societies are plentiful, including the reduced risk of robberies and crimes, more transparent, accountable transactions leading to better defences against money laundering and nefarious activities on the black market. Governments are therefore highly incentivised to see the process through, with Sweden going as far to use tax incentives to encourage citizens to stop using cash and to properly declare income earned in cash.

The charge to have cash alternatives has been promulgated by the ever increasing use of mobile P2P payment systems, some provided by the Banks themselves and other online banking firms like Revolut and Monese, and other tech giants like Apple and Google. The financial services and tech industry is very cognisant of the trend and players are very engaged in creating an edge to win a share the enormous target market. The biggest challenge to having a fully cashless society is the required infrastructure, including strong broadband coverage in remote areas.

In Sweden today, this has already become so successful that more than 80 per cent of all retail transactions have been conducted electronically. More recently, in February 2020, Sweden revealed that it had started its first trial of the digital-krona project: the e-krona. The government plans to implement the digital currency throughout the country in 2021.

It took Sweden 362 years to transition from being the first nation in Europe to adopt banknotes (in 1661) to become the world's first cashless economy in 2023. It is only a matter of time before other countries will follow suit.

Disclaimer: This article was issued by Simon Psaila, investment manager at Calamatta Cuschieri. For more information visit, The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.

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